HSBC Chief Executive Stuart Gulliver said it has set aside $700 million towards anticipated fines over lax security measures in Mexico and the United States that allowed the bank to be used in money laundering operations by drug cartels and other international crime organizations.

The bank also set aside another $1 billion for British consumers for misleading them on loan insurance and another $237 million to cover payouts to small UK businesses wrongly sold complex interest rate hedging products.

Additionally, HSBC is one of several banks under investigations over its role in the fixing of the LIBOR rate.

Gulliver also told reporters that the fines they expect could be "significantly higher" following a U.S. Senate panel investigating the bank's activities.

"What happened in Mexico and the U.S. is shameful, it's embarrassing, it's very painful for all of us in the firm," he said on a conference call. "We need to execute on the compliance changes and then prove ourselves worthy and rebuild this over a number of years. There are no quick and easy fixes."

The Senate report criticized a "pervasively polluted" culture at the bank and said HSBC's Mexican operations had moved $7 billion into its U.S. operations between 2007 and 2008.

"The firm clearly lost its way in this regard and it's right that we apologize," said Gulliver. "Colleagues internally have been aware that this is the backdrop of why we had to change the firm."

All of this has eaten into profits for the bank as it says economic headwinds would persist and it expected the euro zone economy to contract in 2012, while the United States would achieve sub-par growth this year and next. China's economy should have a "soft landing" and grow 8 percent or more this year, it said.

HSBC was formed in 1865 and operated in 84 countries.

Gulliver added that a new streamlined centrally controlled process will help the bank better manage and oversee its operations globally.